The US labor force participation rate fell to 61.4% in July 2026, the lowest since early 2021, with a particularly sharp decline among workers aged 55 and older (36.9% versus 37.9% in December). Adam Shapiro, vice president at the San Francisco Fed, attributes this trend to wealth effects from a stock market that has risen 13.5% so far in 2026 and more than doubled since early 2021, combined with a hiring rate below 4% that makes job searching costly. Joseph Brusuelas, chief economist at RSM, nuances this analysis by noting that demographic aging (27 million more Americans over 65 than in 2005) and reduced immigration also play significant roles in what he describes as a historic exit from the American labor market.
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